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Caroline Valetkevitch

RPT-Wall St Week Ahead-Doubts increase that Q1 will be earnings low point

7:00am EDT

NEW YORK, March 22 As Wall Street braces for what may be the first U.S. profit decline since 2016, investors say the first quarter may not mark the low point for 2019 earnings.

Wall Street Week Ahead: Doubts increase that first quarter will be earnings low point

Mar 22 2019

NEW YORK As Wall Street braces for what may be the first U.S. profit decline since 2016, investors say the first quarter may not mark the low point for 2019 earnings.

Wall St Week Ahead-Doubts increase that Q1 will be earnings low point

Mar 22 2019

By Caroline Valetkevitch NEW YORK, March 22 As Wall Street braces for what may be the first U.S. profit decline since 2016, investors say the first quarter may not mark the low point for 2019 earnings. Concerns about economic weakness in the United States and abroad and the lack of a U.S.-China trade deal are hanging over the outlook, even as the Federal Reserve's dovish stance on interest rates is expected to relieve some of the pressure on companies. Another potential reason to worry: the spread between yields on Treasury bills and the 10-year note , a closely watched signal on the health of the economy, inverted on Friday for the first time since 2007. As stocks sold off in December, some investors worried that 2019 would bring a profit recession for S&P 500 companies , with at least two quarters of year-over-year declines. The last U.S. profit recession ran from July 2015 through June of 2016. Analysts reduced their earnings forecasts for the year as well. They now expect a 1.7 percent year-over-year earnings decline in the first quarter, with some profit growth in the rest of 2019, according to IBES data from Refinitiv. With the market's rebound this year, the Fed on pause and some expecting economic growth to improve after the first quarter, optimism seemed to be increasing that the profit outlook would stabilize after hitting a low point in the current quarter. "It would be great if Q1 represented a low point, but I'm not betting on it," said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago. "I worry that the comparisons are going to be much more difficult as we navigate the rest of the year." This year's earnings already were expected to shrink dramatically compared with 2018, when steep corporate tax cuts fueled earnings gains of about 24 percent. But since the start of the year, the forecast for second-quarter profit growth has fallen to 3.0 percent from 6.4 percent, while estimated growth for the third quarter has dropped to 2.7 percent from 4.9 percent, based on Refinitiv's data. The fourth-quarter growth estimate has come down as well, though it is still relatively strong, at 9.1 percent, based on Refinitiv's data. Those numbers could keep falling, while the first-quarter forecast is likely to improve from here. Since 1994, earnings have surprised to the upside on average by 3.2 percent, according to Refinitiv data, which suggests first-quarter results could finish in positive territory. Still, with investors largely discounting weaker earnings trends, the first-quarter reporting period could bring market volatility, Ameriprise Financial strategists said. On Tuesday, FedEx Corp. cut its 2019 profit forecast for the second time in three months, causing its stock to drop and raising fresh worries about the impact of the trade conflict on earnings, with the company citing slowing global economic conditions and weaker trade growth. Also, Nike's shares were down more than 5 percent on Friday after it reported North American sales that fell short of expectations. The United States and China were scheduled to reach a deal on trade by March 1, but the White House has said it needed more time. "You need this trade dynamic to kind of get a little bit better. There are real concerns. FedEx's numbers are a perfect example. There's been a global growth slowdown and companies are communicating that in terms of their guidance for the first quarter and throughout the year," said Anthony Saglimbene, Ameriprise's global market strategist. To be sure, a lot of those fears could be reversed if there is a resolution in the U.S. trade conflict with China, and if companies' reports are surprisingly upbeat, he said. Strategists said they expect to hear more from companies on the trade conflict when first-quarter reporting kicks into high gear around mid-April. "So much is dependent on what we do with the trade situation with China. The real issue will be the global economy, and in particular, trade with China," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey. (Reporting by Caroline Valetkevitch; Editing by Alden Bentley)

Wall Street gains with tech; S&P 500 posts best week since November

Mar 15 2019

NEW YORK U.S. stocks rose on Friday, led by technology companies, as a report on progress in U.S.-China trade talks lifted sentiment, pushing the S&P 500 to its best week since November. | Video

US STOCKS-Wall St climbs with tech shares, trade optimism

Mar 15 2019

* Indexes up: Dow 0.6 pct, S&P 500 0.6 pct, Nasdaq 0.9 pct (Updates to late afternoon)

S&P 500 eases amid U.S.-China trade uncertainty

Mar 14 2019

NEW YORK The S&P 500 slipped on Thursday, snapping a three-day streak of gains, as uncertainty over when a trade deal between the United States and China would be reached left investors on edge. | Video

US STOCKS-S&P 500 slips amid U.S.-China trade uncertainty

Mar 14 2019

* Trump, Mnuchin say U.S.-China trade talks progressing quickly

US STOCKS-Wall St near flat as trade deal outlook uncertain

Mar 14 2019

* Indexes down: Dow 0.01 pct, S&P 0.1 pct, Nasdaq 0.1 pct (Updates late afternoon)

Wall Street rises; Boeing up despite U.S. grounding of 737 MAX jets

Mar 13 2019

NEW YORK U.S. stocks rose on Wednesday, led by gains in healthcare shares, and Boeing edged upward even as the United States joined other nations in grounding the company's 737 MAX jets. | Video

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